The consortium of investors pushing to open an integrated resort in Nagasaki could collapse if the project isn’t certified by Japan’s central government within the next few months – a calamity that is looking increasingly likely according to Professor Toru Mihara.
Speaking on a panel at G2E Asia on Tuesday examining the outlook for the emerging Japan and Thailand markets, Professor Mihara – who is Chairman of the National Council on Gaming Legislation – said the official view on the current impasse delaying any decision on Nagasaki’s future is that “the ball is in the hands of the prefecture to respond or not” to the central government’s request for further information.
While the government recently approved a larger IR development to be undertaken by MGM Resorts and local partner ORIX Corp in Osaka, it has asked Nagasaki prefecture to provide more details on its submission – particularly around exactly who else is investing alongside Nagasaki’s preferred partner and consortium lead, Casinos Austria.
“That homework has been assigned to the prefecture [but] it may take months to respond,” Professor Mihara said, citing multiple discussions with central government officials. “The issue is unclear because of the lack of clarity in funding that Nagasaki has proposed. For example, under the current [submission] documents we don’t know who the sponsors are, we don’t know who is providing the debt. Nothing has been prepared for the central government, so the government doesn’t understand – who are the real investors, who are the real debtors?
“Nagasaki hasn’t been discussing this with the central government – no disclosure. This has caused certain anxieties among the market that Nagasaki has some stumbling blocks before opening.”
Of particular concern now, Professor Mihara explained, is that time might be running out for the investors in question should a lack of certification drag on, with Nagasaki having submitted its original proposal to the central government in April 2022.
“If there is no reply from Nagasaki prefecture about the investors, well, the central government can say ‘We’ll just wait’,” he said.
“It may take months for a response. Maybe they eventually get certification. Well, that’s fine for Nagasaki but if this continues for months then the consortium of Nagasaki businesses will collapse.
“That is not the concern of the central government so the smart thing for the central government to do is to put the ball in the hands of the prefectural government with the responsibility to respond.
“We don’t know if Nagasaki will be awarded or not but it is possible that this situation will just continue.”
Professor Mihara also addressed the broader timeline issues that have plagued the decades-long push for Japan to realize a legal casino industry, suggesting that the “dual license” system under which local governments must first run their own processes to select a partner before handing off to the central government for final approval has created “lengthy procedures and unintended consequences” whereby “nobody is responsible for keeping a timeline”.
Likewise, politicization of casinos in a nation where public approval has been difficult to garner has also slowed the process because the resulting bureaucratic attitude has been not to hasten administrative procedures, he said.
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